In Halo v. Yale Health Plan, Docket No. 14-4055 (2nd Cir. 2016), the Second Circuit Court of Appeals (the “Court”), faced a failure by a plan to comply with the Department of Labor’s claim procedure. In this case, a claims denial letter did not include the information required by the procedure.
The Court held that, when denying a claim for benefits, a plan’s failure to comply with the Department of Labor’s claims-procedure regulation, 29 C.F.R. § 2560.503-1, will result in that claim being reviewed de novo in federal court, unless the plan has otherwise established procedures in full conformity with the regulation and can show that its failure to comply with the regulation in the processing of a particular claim was inadvertent and harmless. The Court further held that civil penalties are not available to a participant or beneficiary for a plan’s failure to comply with the claims-procedure regulation. Finally, the Court held that a plan’s failure to comply with the claims-procedure regulation may, in the district court’s discretion, constitute good cause warranting the introduction of additional evidence outside the administrative record.